The current yield tends to understate a bond's total return when the bond sells for a discount because:
A)Increases in interest rates will increase the current yield
B)The bond's price will increase each year
C)Current yields only show nominal returns
D)The bond may have a higher face value

Question

Quizplus · Accepted Answer

The Answer of The current yield tends to understate a bond's total return when the bond sells for a discount because:
A)Increases in interest rates will increase the current yield
B)The bond's price will increase each year
C)Current yields only show nominal returns
D)The bond may have a higher face value

The Current Yield Tends to Understate a Bond's Total Return